Institutional investors are entering prediction markets, following a strategy seen earlier in the crypto space.
Asset managers are filing for prediction-market tied exchange-traded funds as the space continues to gain traction.
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Institutional Capital Moves Into Prediction Markets as ETF Race Begins
On February 17, 2026, Bitwise Asset Management submitted a post-effective amendment to register six ETFs under a new brand called “PredictionShares.” The proposed funds, tied to event contracts on the outcome of US elections, would be listed and primarily traded on NYSE Arca.
“PredictionShares will serve as a new Bitwise platform focused on providing exposure to prediction markets. Bitwise’s CIO Matt Hougan says prediction markets are accelerating in both scale and importance, making client exposure an opportunity the firm couldn’t pass up,” Crypto In America host Eleanor Terrett wrote.
The six proposed funds are:
- PredictionShares Democratic President Wins 2028 Election
- PredictionShares Republican President Wins 2028 Election
- PredictionShares Democrats Win Senate 2026 Election
- PredictionShares Republicans Win Senate 2026 Election
- PredictionShares Democrats Win House 2026 Election
- PredictionShares Republicans Win House 2026 Election
Each ETF seeks capital appreciation tied to a specific US election outcome. It follows an 80% investment policy under which it will invest at least 80% of its net assets, plus any borrowings for investment purposes, in derivative instruments whose value is linked to that defined political event.
The funds gain exposure primarily through swap agreements that reference CFTC-regulated event contracts listed on designated contract markets, although they may also invest directly in those event contracts. The event contracts follow a binary payout structure, typically settling at $1 if the specified outcome occurs and at $0 if it does not.
“This makes an investment in the Fund highly risky. An investment in the Fund is not appropriate for investors who do not wish to invest in a highly risky investment product or who do not fully understand the Fund’s investment strategy. Such investors are urged not to purchase Fund Shares,” the filing reads.
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Moreover, GraniteShares, an independent ETF issuer, also filed a Form 485APOS on February 17 for six similar funds. These two filings followed shortly after Roundhill made the same move.
Bloomberg Intelligence Senior Research Analyst James Seyffart indicated that more filings are likely to continue.
“The financialization and ETF-ization of everything continues,” he added.
The ETF filings arrive as the prediction market sector posts record-breaking growth. The move mirrors the surge of ETF applications tied to digital assets, when asset managers rushed to capitalize on renewed momentum in the sector following the election of a pro-crypto administration.
While demand for Bitcoin and Ethereum ETFs appears to have slowed, evidenced by significant outflows from the spot products, institutions may be looking to broaden their exposure to the growing prediction market space.
Data from Dune Analytics highlights the sector’s momentum. Monthly trading volume climbed to $15.4 billion in January, setting a new all-time high.
Transaction count also reached a record, surpassing 122 million, while monthly users rose to 830,520. Taken together, these suggest sustained growth across the prediction market sector, alongside increasing product development and institutional interest.
